asked the Minister for Finance if, in view of the recent decision of Allied Irish Banks Ltd. to spend approximately £100 million in acquiring a bank in the United States, at a time when there are almost 200,000 people unemployed in this country, he will review the existing regulations governing the export of capital, with a view to ensuring the maximum possible investment of Irish capital in projects in Ireland which will create badly needed jobs; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - AIB Bank Acquisition.
4.
The Deputy's question is based on a misunderstanding. I have been assured by the Central Bank that there is no question of an outflow of funds from Ireland in connection with the proposed acquisition.
Is it true that the funds available were accumulated by Allied Irish Banks abroad which should have been returned for investment here and, if so, does the Minister not agree that it is almost exactly the same thing, an outflow of capital or a refusal to bring in the capital which the bank owned? I would also like to ask if the Minister approved the investment by AIB of this capital held by them abroad in purchase of a new bank or if he was asked for his approval?
As far as I am aware, the acquisition in question is being funded from reserves and funds which the bank in question have generated through the operation of a considerable amount of business outside the State, through branches in the USA, UK and continental Europe. It is from those funds that the bank are carrying out the acquisition. Since the funds were raised externally, there is no diversion of capital involved. The operation was carried out in accordance with the normal rules of clearance with the Central Bank and, since there was not a direct exchange control question involved, it was put into a particular category. I am informed that the proposal was fully considered by the bank and I was informed of it shortly before the public announcement was made.
Is the Minister not concerned with regard to investment abroad by Irish-owned companies? Is he aware that the American Government have such controls and make specific arrangements for the return of profits made abroad by companies who invest abroad? Has he any intention of introducing such controls here?
As I said in my original reply, the matter falls outside the considerations now being raised by the Deputy, in the sense that the funds in question were generated by the bank from their activity outside the State so there was no question of an outflow that would require a policy decision here.
Would the Minister not agree that it is exactly the same in the end whether funds are sent from here to the United States or whether funds belonging to AIB in the United States are not transmitted back here? Would the Minister not accept that in so far as any institution here generates earnings abroad, the first consideration in the public interest would be that those funds should be transmitted back here? From the point of view of the national economy, would he not agree that it is exactly the same, in effect, whether money is sent out from here to the United States or money belonging to the AIB is not transmitted back home? Furthermore, does he not think that there is a very important issue of policy involved here? It is not just a banking matter; it has implications of a far-reaching economic nature. As Minister for Finance, he should interest himself in the policy issues of this matter.
I do not accept the Deputy's suggestion that this is the same as the question of whether or not funds should be sent abroad. No movement of funds is involved here. There is no transfer of funds from this country abroad. There is the question of whether funds generated outside the State should be used in a particular way. In this connection there are a number of advantages from our point of view in having a banking involvement outside the State because a banking involvement of a proper kind outside the State can be of assistance to us in raising externally the kind of funding we need in order to fund the Exchequer's borrowing requirement. That is a very positive aspect of the operation in question.
I call Deputy McCartin.
I thought the Leader of the Opposition——
It is difficult to please the Leader of the Opposition. I gave him preference some time ago and he politely declined it.
I was following a certain train of questioning.
Would the Minister like to comment on the fact that at a press conference in New York at this period a senior executive of AIB when asked if this move was a vote of no confidence in the Irish economy stated clearly that he believed Ireland's credit rating abroad had declined and another executive said that Ireland's credit rating was poor? Is the Minister concerned about this? Did he take it up with the Central Bank and the executives of the bank concerned?
I have a very keen interest in and appreciation of the importance of having a good credit rating abroad. Obviously, I cannot take responsibility for statements made by the executive of a bank, but I would not in any way consider this move as being an expression of no confidence in the Irish economy, particularly in view of the fact that two major Irish banking groups have been deeply involved in an operation which has allowed us to raise a substantial amount of funding in the US market.
Deputy Haughey and then a final supplementary from Deputy Mac Giolla.
I have not had a question on this.
Deputy Kelly has also been offering. I will give way to Deputy Kelly and come in after him.
I ask Deputies to allow the Chair to arrange the order of supplementaries.
This is a very important matter, with far-reaching economic and fiscal implications, and you should allow us reasonable latitude to ask the Minister about it.
The Deputy will appreciate that I cannot allow a debate on it.
The Minister has given certain views of a substantive kind. Would he be prepared to go further and make a statement of policy about this type of banking operation? For instance, would he be prepared to say whether people like the IDA, CTT and agencies of that kind were consulted about this and would they be in a position to give any view as to whether it would be beneficial or otherwise? Would he accept that this should come within his compass and his brief as Minister for Finance responsible for the general economic management of our affairs rather than being left simply to the Central Bank and AIB as a purely banking matter, as apparently it has been left?
I cannot say whether the IDA, CTT or any other body was consulted in relation to this measure. I have not got that information. The funding of the purchase over a period of years would not be very large in relation to the total external assets of AIB. In that perspective I do not think that the question arises in quite the way that the Leader of the Opposition has posed it. As to the general question of consultation of the IDA and CTT, I follow the Deputy's train of thought on this. The case is that they have a specific brief, which is to attract capital into the country. To the extent that they are successful in that operation and that we ourselves here create a climate which makes it attractive to bring capital in here, it would be a factor that would be considered by any banking group or anybody else with funds available at home or abroad for investment.
A final supplementary from Deputy Mac Giolla, who put down the question.
I have not got in on this at all.
We have spent some time on this. I will call Deputy Kelly and then I will call a final supplementary from Deputy Mac Giolla.
As a general proposition is it the case, following on the pattern of this instance — to which I take no objection at all — that an Irish company or individual who generates profits abroad from exports or in whatever other way may be possible will be at liberty to invest that money so generated abroad in whichever way he sees fit?
That depends on the circumstances of any given firm and on the flows of funds. As far as flows of funds out of the economy are concerned we have a number of exchange control regulations designed to produce the kind of situation that we want to bring about. To the extent that Irish companies have already invested abroad or from activities abroad have funds available that are not covered by our exchange control regulations they are, of course, at liberty to dispose of those funds in the way that they wish.
As a result of the wide discussion which has taken place and questions which have been asked on this matter, would the Minister agree that his brief from his Department was totally inadequate and, in fact, non-existent?
That is argument.
Would the Minister agree that his replies to the question have been off-the-cuff, off-the-top-of-thehead suggestions, all his own ideas as to whether this would be a good or bad thing? Would he agree that this indicates that neither his Department nor himself took any interest in this matter at the time——
This is solely argument.
——or in the merits or otherwise of it? Will he now answer the question which was asked and not answered? Has he any intention of reviewing the existing regulations governing the export of capital or the investment of capital accumulated abroad by Irish companies?
I would not agree with any of the first five or six parts of the Deputy's question. As I have said, as far as the investment of capital generated here or abroad is concerned, that is already subject to controls. As far as the use of capital funds generated abroad by Irish companies is concerned, they are at liberty to use those funds in the way that they see fit.